Another Reason to Stop Building New Homes: Job Creation

Environmentalists have begun to embrace the idea that new, cutting-edge eco buildings don’t necessarily promise the best route to sustainability. Old buildings do. Rehabilitating them is considerably less wasteful – and more realistic – than replacing them all together. And the economy won’t support much new construction these days anyway.

But among all the reasons why cities should pour resources into retrofitting and repairing the housing stock they already have, here's one more: Residential redevelopment creates more jobs than new construction does. And it’s a safe bet that any city that has an aging, vacant or foreclosed housing problem right now has a jobs problem to go with it.

This intuitively makes sense. Rehabilitating old buildings is more labor-intensive than new construction, since much of the cost of new construction goes literally to bricks and mortar. But we asked Heidi Garrett-Peltier, an economist with the Political Economy Research Institute at the University of Massachusetts Amherst, for some data to back this up. She ran some estimates based on national 2009 data, the most recent numbers available. And it turns out that repairing existing residential buildings produces about 50 percent more jobs than building new ones.

Nationally, about 41 percent of the cost of residential repair goes to labor. For new construction, that number is just 28 percent, meaning considerably more than half of any investment in a new home goes not to construction jobs, but to materials, equipment and things like trucking services.

Garrett-Peltier’s data set didn’t distinguish between the wholesale rehabilitation of abandoned buildings and the lighter lifting of energy retrofits. But cities all across the country will need to do both, especially when the economy recovers and the demand for housing returns as people stop doubling up in each other’s basements.

“There’s hardly a city that doesn’t have housing stock that’s in need of rehabilitation or retrofitting,” says John McIlwain, a senior resident fellow with the Urban Land Institute. “And there are certainly some cities that have huge areas of dwellings that could be retrofitted and reused: Baltimore, Philadelphia, Detroit, Cleveland, Pittsburgh, Bridgeport. All of the old industrial cities.”

Cities thinking about sustainability are already on to some of this. But the financing models aren’t there quite yet.

“Unfortunately, the real estate industry isn’t really designed that way,” says Uwe Brandes, ULI’s vice president for initiatives. “In so many different ways, the real estate industry is designed to produce new buildings, and so recapitalizing old buildings, especially in a state-of-the-art way, is not something that collectively we’re particularly good at.”

There is, of course, one other alternative to rehabbing old houses and apartments – demolishing them completely. From a jobs perspective, this is clearly a bad deal. It takes two or three workers a couple of hours to implode a home, although some cities have begun to consider piecemeal deconstruction and recycling.

Politicians might call these “green jobs,” and it’s true that just about any repair work today would make an old building more efficient than it used to be. But this isn't about a weighted political catch phrase. It's about jobs, whatever you call them. And cities trying to find them would be wise to turn to the housing they already have.

“It’s not that we don’t need new homes, it’s that we certainly can use a lot of what we have,” McIlwain says, adding that we should reuse as much of it as possible. As the population grows, new construction is inevitable. “But in the past, it was all new. Now it shouldn’t be all used. It’s going to have to both.”

About the Author

Emily Badger is a former staff writer at CityLab. Her work has previously appeared in Pacific Standard, GOOD, The Christian Science Monitor, and The New York Times. She lives in the Washington, D.C. area.